Supreme Court New South Wales Medium Neutral Citation: Wirepa v Hill (No. 2) [2023] NSWSC 1654 Hearing dates: 12 December 2023 Date of orders: 12 December 2023 Decision date: 12 February 2024 Jurisdiction: Equity Before: Slattery J Decision: Previous costs orders varied to award indemnity costs after 4 April 2023. Catchwords: COSTS – indemnity costs – Calderbank letters – orders made dismissing the plaintiff's proceedings with a costs order made against the plaintiff on the ordinary basis – stay granted on the orders for dismissal, provided the plaintiff complied with several procedural requirements designed to progress the proceedings – plaintiff fails to comply with the procedural requirements and proceedings are dismissed – two Calderbank letters served – whether the first Calderbank letter is effective – the second Calderbank letter stipulates for a term that the plaintiff will not disparage the defendant and that any settlement arising for acceptance of the letter will be kept confidential – discussion as to whether the second Calderbank letter is likely to be ineffective. Legislation Cited: Civil Procedure Act 2005, ss 61, 146 Conveyancing Act 1919, s 88K Uniform Civil Procedure Rules 2005, r 12.7 Cases Cited: Commonwealth v Gretton [2008] NSWCA 117 Leichardt Municipal Council v Green [2004] NSWCA 341 Ofrica v Cameron (No 2) [2008] NSWCA 242 Wirepa v Hill [2023] NSWSC 1394 Category: Costs Parties: Plaintiff: Silvana Liliana Wirepa First Defendant: Christopher James Hill Second Defendant: David Graham Hill Third Defendant: Richard Thomas McLeod Representation: Solicitors: Plaintiff: in person Defendants: A. du Maurier, Watson Webb lawyers File Number(s): 2022/336079 Publication restriction: No EX TEMPORE Judgment 1. This is the Court's second judgment in these proceedings. In the Court's first judgment given on 23 November 2023, the Court dismissed the plaintiff's Summons under Civil Procedure Act 2005, s 61 and under the Uniform Civil Procedure Rules 2005 ("UCPR"), r 12.7 and ordered that the plaintiff pay 80% of the defendants' costs of the proceedings on the ordinary basis: Wirepa v Hill [2023] NSWSC 1394. This judgment should be read with the Court's first judgment and events, persons and things are referred to in both judgments in the same way. 2. The Court also ordered in its first judgment that the plaintiff may not commence further proceedings seeking relief in substantially the same form as the relief sought in the Summons without first paying the defendants' costs, and that upon dismissal of the Summons, the defendants' Cross Claim should be transferred to the District Court under Civil Procedure Act, s 146. 3. But the operation of these orders was stayed until 8 December 2023 upon terms. The stay was granted to permit Ms Wirepa to take advantage of the funds she anticipated would become available to her through the sale of the New Zealand property or from the sale of the Kotara property following the outcome of the Family Law proceedings. 4. The stay effectively allowed Ms Wirepa two months from the principal hearing dates of 6 and 13 October 2023, to get her procedural house into order. Ms Wirepa was clearly warned in early to mid-October to attend to her procedural defaults in this action. But when the matter came before the Court today, Ms Wirepa did not present to the Court any evidence that conformed with the terms of the stay on the first judgment. 5. Those orders would have permitted the stay to continue, had Ms Wirepa complied with them. Those orders were as follows: "(1) For the purpose of these orders (a) "the Land" means all the land in title references 123/DP[number not published], 1/DP[number not published], 30/CD[number not published] and 18/DP[number not published], (b) "the Summons" means the Summons filed by the plaintiff on 9 November 2022, (c) the Cross Claim means the Cross Claim filed by the defendants/cross claimants on 17 March 2023, (d) "the Motion" means the defendants' Notice of Motion filed on 5 July 2023, and (e) "the easement" means the easement claimed in prayer for relief 9 in the Summons. (2) The plaintiff's Summons is dismissed on the following grounds, namely: (a) that the plaintiff is a party to these proceeding to whom the Court has given a direction (by means of the Court accepting the undertaking of the plaintiff in the Court's consent orders dated 17 November 2022) that the plaintiff will at her cost: (i) conduct a survey of the Land that is sufficient to enable the easement to be registered ("the survey task"); and (ii) have drawn up all necessary documentation for the registration of the easement in the nature of a right of way ("the survey and registration undertaking") but the plaintiff has failed since 17 November 2022 to complete a survey task, or have the necessary registration documentation drawn up. (b) under Uniform Civil Procedure Rules 2005 ("UCPR"), r 12.7 because the plaintiff has not conducted the proceedings with due dispatch by reason of the conduct identified in sub-paragraph (a) of this order, by failing to comply with the survey and registration undertaking. (3) Order that the plaintiff (a) shall pay 80% of the defendants' costs of these proceedings on the ordinary basis; and (b) may not commence further proceeding seeking relief substantially the same as the relief sought in the Summons, without first paying the defendants' costs ordered in (a). (4) Note that the defendants no longer seek the relief sought in prayer for relief 1 of the Motion. (5) Upon the dismissal of the Summons pursuant to Order 2 of these orders, the defendants' Cross Claim will also be transferred to the District Court for hearing and determination, pursuant to Civil Procedure Act 2005, s 146. (6) Stay the operation of Orders (1) – (5) until 8 December 2023. (7) The stay provided for in Order (6) may be ordered to continue and then these proceedings may be listed for hearing, if the plaintiff can satisfy the Court on the basis of evidence filed and served on or before 8 December 2023 that: (a) the plaintiff has engaged a surveyor to undertake and complete the survey task and the plaintiff has set aside or secured sufficient funds to pay that surveyor; (b) the plaintiff has engaged lawyers to assist the plaintiff to fulfill the survey and registration undertaking and has set aside or secured sufficient funds to pay those lawyers; and (c) the plaintiff has paid into Court, or otherwise set aside or secured, sufficient funds to meet, (i) the defendants' reasonable costs of registering the deposited plan to create the easement; and (ii) the consideration for the transfer of the easement to the plaintiff." 1. Ms Wirepa has not filed any concrete evidence which would allow the Court to be satisfied that she has engaged a surveyor or lawyers or paid into Court a sum sufficient to meet the defendants' reasonable costs associated with the conveyancing of the claimed easement. None of that having been done, it would be unfair to both parties in these proceedings for the Court to extend the stay any further, and the Court declines to do so. 2. Ms Wirepa is at liberty, should she choose, to commence fresh proceedings if she comes into funds which permits her to do that, but she will have to comply with Order 3(b) of the Orders made on 23 November 2023 by paying the defendant's costs of these proceedings upon the commencement of those future proceedings. 3. Ms Wirepa has said to the Court in her oral submissions by AVL today that she has been awarded $200,000 in the Family Law proceedings but the proceedings for the New Zealand property have not yet been resolved. She further says she has been unable to obtain legal assistance to pursue the present litigation upon the terms which the Court has imposed. In the Court's view, the terms that were imposed were reasonable and Ms Wirepa had ample opportunity, effectively two calendar months, to overcome the procedural deficiencies in her position. 4. Given the correspondence on behalf of Ms Wirepa from Ms Robertson, the solicitor in New Zealand, which the Court cited in its previous judgment, the Court is not persuaded that lack of funding is the sole impediment to Ms Wirepa gaining legal advice to advance the present case. Ms Robertson indicated in her previous correspondence she was prepared to undertake to quarantine the proceeds of sale of the New Zealand property in circumstances where the evidence before the Court clearly indicated that Ms Wirepa had an unencumbered right to the proceeds of sale of 71% of that property, the value of which could be estimated with some accuracy. Given the availability of those proceeds of sale, it is difficult to understand why, if she was motivated to do so, Ms Wirepa could not turn those assets to account to comply with the terms which the Court placed upon continuation of the stay. 5. The Hills now claim indemnity costs based on two Calderbank letters, and on the basis that Ms Wirepa has conducted the proceedings unreasonably. 6. Consideration of the issue of indemnity costs in this case really comes down to the Calderbank letters. Any unreasonable conduct of Ms Wirepa seems to be at the back end of the proceedings, which coincides with the period of the Calderbank letters. And as the Court's previous judgment shows, much of her conduct up to and during that period can be explained by cash flow problems rather than deliberately malign or obstructive conduct. 7. The Court will therefore focus on the Calderbank letters, which are annexed to the affidavit of Mr Robert David Webb of 14 August 2023. There are two Calderbank letters: the first is dated 21 March 2023, and the second is dated 19 May 2023. The first expired on 4 April 2023, and the second expired on 2 June 2023. The Court is prepared to make an order for indemnity costs based upon the first Calderbank letter. But the Court will also make some brief comments about the second Calderbank letter, which should be of general interest. 8. As to the first Calderbank letter, its relevant text was the following: "1. Within 7 days of your acceptance of this offer, the parties (being you, our clients and the third defendant, Mr McLeod) shall sign consent orders containing the following orders: a. The Plaintiff's application for an easement pursuant to s 88K of the Conveyancing Act 1919 (NSW) be dismissed. b. The Plaintiff is to pay the First and Second Defendants' costs in the agreed sum of $42,000.00 2. Those consent orders shall be provided to the Court within 7 days of your acceptance of this offer, with a request for the orders to be made in chambers. 3. The Access Agreement entered by the late Graham Hamilton Hill, Peter Leslie Forrester and Gillian Margaret Burns shall be terminated forthwith. 4. Chris and David shall be granted a licence to access your property on the same terms as those contained in the Access Agreement. 5. Chris and David consent to an easement in the nature of a right of way being registered on the land in title references [Title References not published], [Title References not published], [Title References not published] and [Title References not published] (the Properties) in favour of the land in title reference [Title References not published] (Your Property) (the Easement). 6. Chris and David shall engage a surveyor to have a survey of the Properties conducted and shall have drawn up all necessary documentation for the registration of the Easement, both of which shall be at your cost. Those drawings shall be the exclusive basis upon which the Easement shall be granted. 7. Chris and David shall engage a valuer to undertake a valuation of the Properties to determine the compensation, which compensation and the costs of the valuer shall be payable by you. 8. You will pay our clients the compensation determined by the valuer within 7 days of the Easement being registered. 9. Chris and David will pay the invoices issued by the surveyor and valuer engaged by them and you will reimburse Chris and David the amounts of those invoices within 7 days of being notified that they have been paid by Chris and David. 10. You consent to judgment being entered against you if you fail to pay: a. any amount owed or owing by you to Chris and David in accordance with [9] above; or b. the compensation determined by the valuer engaged by Chris and David within 7 days of the Easement being registered. 11. You shall close all gates on your properties as you pass through them where the gate is closed prior to you passing through it. 12. We shall prepare a Deed of Settlement and Release to reflect the above terms. 13. Once the drawings referred to in [6] above have been prepared, and the valuation referred to in [7] above has been obtained, we shall prepare a Deed of Agreement for Easement which shall reflect the above terms and shall set out, amongst other things: a. the conditions upon which the Easement shall be granted to you, including in relation to the ongoing maintenance of the path of the Easement, including the costs associated with the maintenance of the path of the Easement; b. the compensation payable by you; and c. that you are prohibited from leaving chattels, including motor vehicles, on the Properties, and are prohibited from directing visitors to Your Property to leave chattels on the Properties. 14. You will pay our clients' ongoing legal costs incurred in relation to your application for an easement, including the legal costs incurred in relation to giving effect to terms [6] – [10] and [12] – [13] of this letter, as agreed or assessed as between our clients and us. 15. You consent to judgment being entered against you if you fail to pay our client's legal costs in accordance with [14] above within 14 days of being notified of the amount of the legal costs payable by our client, agreed or assessed as between our clients and us." 1. The Court has evidence before it, which it accepts, that the third defendant, Mr McCloud was notified of the terms of the offer and indicated that he consented to the proceedings being dismissed on those terms and would sign Court orders in the terms conveyed by the offer. Thus Mr McLoud's independent position was not an obstacle to the first Calderbank offer being effective. 2. The outcome of these proceedings is the dismissal of the Conveyancing Act 1919, s 88K relief in the proceedings. This was clearly a better outcome for the defendants than the terms of the offer, which contemplated the grant of an easement. The first Calderbank offer and the outcome of the proceedings parallel one another. The offer sets to one side the Cross Claim for nuisance and trespass which is still on foot and, by the Court's previous orders, will be transferred to the District Court. In that sense the offers are like for like, although the first Calderbank offer contains terms that go somewhat beyond the precise relief sought in the Summons. Most of those terms are machinery terms that are necessary or convenient for implementing the relief sought in the Summons to grant an easement under the Conveyancing Act, s 88K. 3. The applicable legal principles may be shortly stated. Offerors of Calderbank offers bear the persuasive burden of satisfying the Court to exercise a discretion to award indemnity costs in their favour: Commonwealth v Gretton [2008] NSWCA 117 at [46]. The Calderbank letter must be shown to have been a genuine offer of compromise: Leichardt Municipal Council v Green [2004] NSWCA 341 at [21] – [24], [36]. And it must be demonstrated that rejection of the offer was unreasonable: Ofrica v Cameron (No 2) [2008] NSWCA 242 at [20]. 4. The defendants have clearly done better than the first Calderbank offer which would have granted them an easement. The first Calderbank offer allowed a reasonable time for acceptance at and contained a genuine compromise. In the circumstances rejection of the offer was unreasonable: the result of the dismissal of the proceedings is that no easement has been granted, and absent an easement the existing license arrangements continue and the defendants have secured an order for costs against the plaintiff on the ordinary basis. 5. The Court will therefore make an indemnity costs order against the plaintiff and vary Order 3(a) of the Orders made on 23 November 2023 accordingly. The variation shall make indemnity costs orders after the date of expiry of the Calderbank letter, which is 4 April 2023. 6. Therefore Order 3(a) of the Orders on 23 November 2023 will be varied so that it now reads: "Order that the plaintiff (a) shall pay 80% of the defendants' costs of these proceedings on the ordinary basis up to 4 April 2023 and thereafter pay 80 % of the defendant's costs on the indemnity basis." 1. The Court would not have made an indemnity costs order based upon the second Calderbank letter, which was in different terms to the first Calderbank letter. The second Calderbank letter deals with the terms of the proposed deed of settlement and release in more detail than the first Calderbank letter. Clause 12 of the second Calderbank letter provides as follows: "12. We shall prepare a Deed of Settlement and Release to reflect the above terms, which shall include: a. mutual releases; b. non-disparagement clauses; and c. confidentiality clauses." 1. The Court regards mutual releases (12(a)) as a reasonable and integral part of a settlement offer on Calderbank terms. That would have been the effect of the outcome of the proceedings upon the entry of judgment, which would have had the effect of ending the proceedings between the parties. 2. But non-disparagement the confidentiality clauses (in 12(b) and (c) are in a different category. It is now not uncommon in commercial negotiations for parties to stipulate for non-disparagement and confidentiality clauses. The circumstances in which parties seek such clauses will vary. In this case there was a bitter dispute between neighbours about an easement. Had Ms Wirepa obtained the relief that she sought on her Summons, or had that relief been dismissed, it was highly unlikely that the Court would in either case have made non-disparagement orders between these parties or made suppression orders imposing a regime of confidentiality on the outcome of the proceedings. The proceedings were conducted in public as an essential part of the good administration of justice. Moreover, final relief of that kind was not sought in the Summons, or in the Cross Summons. 3. Had non-disparagement the confidentiality clauses been stipulated for in a Calderbank letter which was otherwise operative, the defendants would have been stipulating for an outcome which they could never have achieved in this litigation. That would probably have made the Calderbank letter ineffective, as rejection of the offer would have been reasonable. 4. For these reasons the Court makes the following order: 1. Order that order 3(a) of the orders on 23 November 2023 be varied so that it now reads, "Order that the plaintiff (a) shall pay 80% of the defendants' costs of these proceedings on the ordinary basis up to 4 April 2023 and thereafter pay 80 % of the defendant's costs on the indemnity basis." ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 February 2024